New home sales dip doesn't detour best year since '09

WASHINGTON -- Purchases of new U.S. homes decreased in December, a temporary blemish as the industry wrapped up its best year since 2009 to emerge as a bright spot for the economy.

The 7.3 percent drop in December sales to a 369,000 annual pace followed the prior month’s 398,000 rate that was faster than previously estimated, Commerce Department figures showed Friday.

Builders sold 367,000 homes in 2012, the most in three years and the first annual increase in seven.

Mortgage rates near record lows, improved job prospects and a rising number of households should keep stoking demand and benefit builders such as Lennar Corp. (NYSE: LEN) and KB Home (NYSE: KB).

Combined sales of new and previously owned properties last year rose 9.9 percent, the biggest annual gain since 1998 and an indication residential real estate is helping drive growth.

“2013 will show more of an increase in prices and more positive sales activity and housing starts,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, N.C.a, a unit of the biggest U.S. mortgage lender.

“We expect to see residential investment adding to growth despite a very sluggish overall pace of economic growth,” Khan said.

For all of 2012, new-home sales increased 19.9 percent, the biggest jump since 1983 and the first gain since 2005.

At Lennar, the largest U.S. homebuilder by market value, revenue jumped 42 percent in the three months ended Nov. 30 from a year earlier.

“2012 was a turnaround year that confirmed what we had been seeing and communicating for several quarters, and that is that we are in fact in the early stages of the housing recovery,” Stuart Miller, chief executive officer at Miami- based Lennar, said on Jan. 15.

“The recovery began in micro markets across the country, and it’s continued to spread,” he said.

Los Angeles-based builder KB Home said this past week that orders for new dwellings climbed 54 percent in the first seven weeks of its fiscal first quarter.

Friday’s Commerce Department data showed the median price of a new home in the U.S. increased 13.9 percent last month from a year ago, climbing to $248,900.

In December, purchases decreased in three of four regions, led by a 29.4 percent slump in the Northeast.

Sales also fell 11.1 percent in the West and 8.4 percent in the South. They rose 21.3 percent in the Midwest.

The housing data for last year show the market gained vitality in 2012.

Construction of new properties rose last month to the fastest pace since June 2008, according to Jan. 17 Commerce Department data. The December figure capped the best year for homebuilding since 2008.

Friday’s report showed the supply of new homes at the current sales rate climbed to 4.9 months from 4.5 months in November.

There were 151,000 new houses on the market at the end of December, up from 149,000 the prior month.

Some 1.82 million previously-owned homes were on the market in December, the fewest since January 2001, according to National Association of Realtors data earlier this week.

The building environment has brightened the mood among construction companies.

The National Association of Home Builders/Wells Fargo builder sentiment index held at 47 in January, the highest since 2006.